Transaction databases are integral to the market approach in business valuation, providing empirical data on private company sales. This article examines three leading databases—BIZCOMPS, ValuSource Market Comps, and DealStats—highlighting their advantages, limitations, and implications for valuation accuracy. The report integrates commentary and research from valuation professionals and third-party sources to offer a well-rounded perspective. 1. … Continue reading BIZCOMPS, ValuSource Market Comps, and DealStats in Business Valuation
Valuation Insights & Articles
Welcome to Valuation Insights & Articles, where Highland Global shares thought leadership, expert guidance, and commentary on the ever-evolving world of business valuation. Here, you’ll find practical insights tailored for SBA lenders, business owners, attorneys, and financial professionals. Topics include SBA 7(a) valuation standards, goodwill analysis, tax-related valuation, M&A strategy, litigation support, and valuation methodology best practices. Stay informed with clear, actionable content rooted in real-world experience and regulatory knowledge.
Liquor License Quotas and SBA 7(a) Lending — Navigating the Disconnect Between Market Value and Going Concern Appraisals
In states with liquor license quotas, the market value of a liquor license can significantly exceed the operating cash flow of the business holding it, creating a valuation challenge for SBA 7(a) loans. These loans prioritize the business as a going concern, focusing on cash flow rather than intangible asset premiums, often leading to a … Continue reading Liquor License Quotas and SBA 7(a) Lending — Navigating the Disconnect Between Market Value and Going Concern Appraisals
🎁 Resource Drop: Valuation Projections Risk Checklist
📘 New tool: Our Projections Risk Checklist for SBA lenders Includes: ✅ When projections are acceptable✅ Common abuses in appraisals✅ Questions for review 📩 Click here to grab your copy.
📊 Case Study: Startup-Level Projections in a Mature Business
💼 We reviewed a valuation where the buyer projected 30% growth and a 2x revenue jump post-acquisition. The valuation? Based on unsupported projections as if the company were a startup. But: Mature business in a mature industry Historic growth = 2–3% No new contracts No capital investment We valued the business based on historic free … Continue reading 📊 Case Study: Startup-Level Projections in a Mature Business
🧠 Sin Spotlight: Projections ≠ Valuation Basis
📉 Projections are a tool—generally not a justification for 7a valuations. The SBA favors valuation based on historical performance, not hypothetical growth. But we’ve seen appraisals that: Use unsupported forecasts to support value Apply multiples to “future EBITDA” Ignore risk adjustments 📌 If the value is based on what the business might do or what … Continue reading 🧠 Sin Spotlight: Projections ≠ Valuation Basis
🎁 Resource Drop: CapEx Adjustment Worksheet
🧾 We built a CapEx Adjustment Worksheet to help lenders and analysts test if CapEx has been normalized. It includes: ✅ CapEx drivers✅ Normalization considerations ✅ Common appraisal errors✅ SBA considerations for capital assets 📩 Click here to grab your copy.
📊 Case Study: Obsolete Equipment, Inflated Value
💼 A service company showed $480K in free cash flow—but had deferred equipment replacements for 3 years. When we normalized CapEx to $90K/year?⚠️ True FCF = $390K📉 Value dropped 20%—and the lender avoided a post-closing cash crunch. Cash flow without reinvestment isn’t sustainable. It’s short-term optimism.
🧠 Sin Spotlight: CapEx Gets Ignored Too Often
🧯 Deadly Sin: Ignoring Capital Expenditures A business that looks cash-rich today might fall apart tomorrow if it’s not reinvesting. CapEx needs are often: 🔧 Buried in “repairs and maintenance”📉 Ignored in cash flow estimates📉 Excluded from projections 📌 SBA-compliant valuations must deduct reasonable ongoing CapEx to calculate real free cash flow. Otherwise, you're lending … Continue reading 🧠 Sin Spotlight: CapEx Gets Ignored Too Often
🎁 Resource Drop: Personal vs. Enterprise Goodwill Guide
📘 We’ve built a Goodwill Evaluation Guide for SBA lenders. Inside: ✅ Definitions ✅ Transferability checklist✅ Real-world examples by industry✅ Tips for credit memos 📩 Click here to grab your copy.
📊 Case Study: Doctor-Owned Practice
We reviewed a $1.4M valuation for a solo dental practice. Cash flow looked great… but: No associate No buyer in place 90% of patients came to see the doctor, not the brand We applied a personal goodwill risk premium. Value adjusted. Structure changed. Deal closed—but safely. 📌 If the business is built on a name, … Continue reading 📊 Case Study: Doctor-Owned Practice
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